By

Nitin Aneja
DSS is a part of special category of information systems that
are designed to enhance managerial decision-making.
Decision support system (DSS) is a computer-based
information system that combines models and data in an
attempt to solve semi-structured and unstructured
problems with user involvement.
They help managers make more effective decisions by
answering complex questions such as;
Should a newer, more powerful machine replace two older
pieces of equipment?
Should our company sell directly to the retail market,
continue to sell through distributors, or both?
Should our company order parts more frequently and in
smaller lots?

DSSs help managers make decisions that are
unique, rapidly changing and not easily
specified in advance.
Although DSS uses internal information from
TPS and MIS, it also uses external sources,
such as current stock prices or product prices
of competitors.
DSSs combine data and sophisticated
analytical models to support semi-structured
and unstructured decision making.
DSSs help managers better use their
knowledge and help create new knowledge.
They are essential components of knowledge
management systems.
DSS relies on model bases and databases.
A model (in decision making) is a simplified representation
of reality. Simplified because reality is too complex to copy
exactly and much of the processes complexity is irrelevant
to a specific problem.
A DSS model base is a software component that contains
all the models used to develop applications to run the
system.
DSS uses models to manipulate data.
Ex: If you have some historic sales data, you can use many
different types of models to create a forecast of future
sales.
DSS software is a collection of software tools
that are used for data analysis or a collection
of mathematical and analytical models.
There can be 3 different types of modeling
software for DSSs:
statistical models,
optimization models,
forecasting models.
Statistical modeling software can be used to
help establish relationships such as relating
product sales to differences in age, income or
other factors between communities.
Ex: SPSS.

Optimization models often using Linear
Programming (LP) determine the proper mix
of products within a given market to
maximize profit.

The user of this type of model might supply a
range of historical data to project future
conditions and sales that might result from
those conditions.
Companies often use this software to predict
the action of competitors.
Using a DSS involves 4 basic types of
analytical modeling activities:
What-if analysis
Sensitivity analysis
Goal-seeking analysis
Optimization analysis
An end user makes predictions and assumptions
regarding the input data, many of which are based on
the assessment of uncertain futures.
When the model is solved, the results depend on these
assumptions.
What-if analysis attempts to check the impact of a
change in the assumptions on the proposed solution.
Ex: What will happen to the total inventory cost if the
originally assumed cost of carrying inventories is not
10 percent but 12 percent? Or, what will be the market
share if the initially assumed advertising budget is
overspent by 5 percent?
In a well designed DSS, managers themselves can
interactively ask the computer these types of
questions as many times as needed.


Investigation of the effect that changes in one
or more parts of a model have on other parts
of the model.
Usually we check the impact that changes in
input variables on output variables.
It is a special case of what-if analysis.

Attempts to find the value of the inputs
necessary to achieve a desired level of outputs.
Ex: let us say that a DSS solution yielded a
profit of $ 2 million. Management wants to
know that what sales volume and additional
advertising would be necessary to generate a
profit of $2.7 million. This is a goal-seeking
problem.
Often uses Linear Programming.
Determines optimal resource allocation to
max or minimize specified variable such as
cost, profit, revenue, or risk.
A classic use of optimization analysis is to
determine the proper mix products within a
given market to maximize profits.
Improved decision making through better
understanding of the businesses
An increased number of decision alternatives
examined
The ability to implement ad hoc analysis
Faster response to expended situations
Improved communication
More effective teamwork
Better control
Time and costs savings